S.Africa energy regulator approves power cost relief for ferrochrome makers

South Africa's Energy Regulator approved Eskom's application on Thursday to reduce electricity rates?by 35 percent for two distressed ferrochrome plants that are battling high power costs.

In recent years, more than a dozen smelters in South Africa have closed, resulting in thousands of job losses. This is largely because electricity prices have increased by over 900% since 2008.

In December, Eskom sought approval from the National Energy Regulator of South Africa for a tariff cut for Samancor Chrome and a joint venture between Glencore Resources and Merafe Resources to avoid smelter closings and save jobs.

Samancor Chrome, and the Glencore/Merafe joint-venture started 'processes' late last year to close their smelters. They cited viability issues mainly related high electricity costs.

Willibrod majola, NERSA's official in charge of virtual briefings, said that the approval was conditional on the government paying the difference between the 1.36 rand ($0.0864) and 87.74 South African Cents per kilowatt -hour the two ferrochrome companies will pay for 12 months beginning January 2026.

Majola said that the cost of any shortfall in tariffs should not be paid by customers on standard tariffs.

South Africa has lost its top spot as the world's largest ferrochrome producer to China, primarily due to the high cost of electricity.

Smelters that require a lot of energy combine iron and chromium to make ferrochrome. This is used primarily in the production of steel.

(source: Reuters)